ERP transformation is often about application rationalization. We look at the five issues and blind spots that can occur when you have more than the necessary number of ERP platforms.
Enterprise Resource Planning (ERP) transformation isn't just a one-off. There have been, for example, 24 different SAP S4/HANA Cloud releases, so far, with each one adding new functionality that your organization could leverage.
To continue to take advantage of the increasing list of capabilities that new releases of ERP tools provide, organizations must adopt a culture of continuous transformation. This doesn't just involve changing your way of thinking, but all your people and processes must be adapted to flexibility.
Before you can begin any of that work, however, you first need to tidy up your current ERP estate. This is difficult enough when you just have one legacy ERP platform, but what about when you have several?
When ERP Systems Multiply
As explained above, the pace of technological change is eternally increasing. Unfortunately, no-one could have predicted that.
When the very first digital transformations happened in the 1960s, everyone assumed that it was a one-off; that computers would stay exactly as they were. These systems weren't set up for the near-constant change we're still struggling with today.
Many industries still to this day have tech stacks built upon 30-year-old software, or older. Even as new technology arrived, systems were built upon systems, and were often incompatible with each other, let alone with the technology of the future.
This was made even more difficult with the number of mergers and acquisitions that have taken place over the years leaving the merged company with duplicate systems. Finally, the need to move to remote working almost overnight during COVID lockdown saw many firms acquiring new technology before they had a chance to retire the old software.
All this has left many incumbent organizations with application portfolios in dire need of rationalization. It's, therefore, no wonder that organizations are often left with multiple Enterprise Resource Planning (ERP) systems.
Why, however, is this an issue?
The Blind Spots Of Overlapping ERP Systems
CFO Magazine conducted a poll of finance shared services teams to find out if there was a relation between the team's efficiency and the number of Enterprise Resource Planning (ERP) systems they used. They found that organizations in the top 25% in terms of success had no more than two ERP systems.
There are five main reasons for this:
1 User experience
Juggling between different ERP systems isn't anyone's idea of fun. Doing so is tedious and time-consuming for your employees, but worse, it can cause frustration for your customers. Even if the front-end of your customer system is congruous, having multiple systems at the back end can cause failures at crucial customer touchpoints.
2 Lack of visibility
Having multiple ERP systems is a classic case of the right hand not knowing what the left hand is doing. With your work processes split between multiple systems, it's much easier to lose clarity and control on what your team is working on.
3 Data integrity
Different ERP systems store data in different formats. This makes it difficult to synergize the information to migrate, share, or leverage it across different systems. Maintaining agility in the modern market often requires breaking down data silos, which is much easier within a single source system.
4 Higher costs
Paying for two ERP systems is more expensive than one. Even expanding and upgrading your license for one particular system can be more cost effective than running multiple systems due to economies of scale. Transitioning to a single ERP system can be an ideal way to cut costs at a time when everyone is being asked to do more with less.
5 Inflexibility
When you finally do get around to your ERP transformation, moving from one system to another will be effort enough; moving from multiple systems to another set of systems will be even more challenging. This will particularly be the case when the split between which system handles what isn't one-to-one. This can leave you far less agile in your enterprise architecture than you need to be.
What's The Alternative For ERP Transformation?
Transitioning from multiple Enterprise Resource Planning (ERP) systems to a single system will be less effort than moving from one group of ERP tools to another set. Either way, it will be challenging, but once that effort is complete, you won't need to worry about moving from set-to-set again.
Best of all, a single, modern ERP system will have been created with future updates in mind. This will make future ERP transformations much simpler, cheaper, and quicker. It's time to invest in that one, major transformation to a single tool.
Yet, before you transform, you need to get a full overview of your existing ERP architecture and how it works. This is particularly true when your ERP landscape is out-of-date and in need of attention.
The LeanIX EAM
Due to the complexity and high-level integration of Enterprise Resource Planning (ERP) environments, the key success factors for a successful transformation are transparency of the current ERP and non-ERP landscape and proper milestone planning. You can confidently navigate your ERP transformation using the LeanIX Enterprise Architecture Management platform (EAM).
The LeanIX EAM is design to help you:
- obtain complete transparency on your current landscape and all interdependencies
- collaborate and align transformation initiatives with business capabilities and objectives
- build effective architectural roadmaps to successfully navigate ERP transformation
To find out more about how the LeanIX EAM can support you in transitioning from multiple ERP systems to a single, future-proof instance, visit our solution page:
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